Bursa Malaysia Daily Market Report - 13 March

Transcription

1. Tuesday , 13 March, 2018 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only N ew s 1. D ai l y M arke t C om men t a ry 2. D ai l y B ri ef Fu nd a me n tal Rep o r ts 1 . Be r m a z A u t o Be r h a d : A Su rg e in E a rn in g s Q o Q 2 . M a la ys i a A i rp o rt s H o l d i n g s Be rh a d : Se a so n a l l y S tro n g C N Y T ra f f ic 3 . P la n t a t io n S e c t o r : J u s t N o O o m p h … Te ch n ic al R ep o rt s 1. D ai l y Te ch n ic a l St o ck Pi cks ( L oc al ) 2. D ai l y St o ck S cr een 3. D ai l y For ei gn T ech n i c al St o ck P i cks ( HK ) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my
2. Daily Market Commentary Tuesday , 13 March 2018 TA Research, e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (12.03.2018) (mil) Main Market 1,371.4 Warrants 382.5 ACE Market 708.5 Bond 5.9 ETF 0.0 LEAP 0.0 Total 2,468.3 Off Market 76.4 Volume +/-chg (RMmn) 39.7 2,245.2 35.0 56.6 140.9 97.6 2.2 0.7 -0.1 0.0 (0.05) 0.0 2,400.2 -81.7 293.6 Value Value/ +/-chg Volume 366.6 1.64 7.9 0.15 10.4 0.14 0.1 0.12 -0.1 1.17 0.0 0.36 0.97 203.3 3.84 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP March Futures Other Markets DOW JONES NASDAQ (US) FTSE (UK) NIKKEI (JAPAN) KOSPI (KOREA) HANG SENG (HK) FSSTI (S'PORE) SET (BANGKOK) JCI (JAKARTA) SHANGHAI SHENZHEN AUSTRALIA (mn) 20.0 16.0 9.1 8.0 6.1 5.0 3.6 3.2 2.1 1.0 % YTD chg 17.30 141.93 88.78 22.50 0.94 1.09 0.56 1.22 3.58 1.30 -6.54 4.37 25,178.61 7,588.33 7,214.76 21,824.03 2,484.12 31,594.33 3,540.19 1,800.32 6,500.69 3,326.70 1,908.84 5,996.12 -157.13 27.51 -9.75 354.83 24.67 598.12 54.62 24.95 67.36 19.53 23.45 32.89 -0.62 0.36 -0.13 1.65 1.00 1.93 1.57 1.41 1.05 0.59 1.24 0.55 1.86 9.92 -6.15 -4.13 0.67 5.60 4.03 2.66 2.28 0.59 0.50 -1.14 5.57 8.06 0.70 0.72 1.40 4.85 0.97 0.06 0.15 0.26 Exchange Rate USD/MYR 3.9045 -0.007 USD/JPY 106.42 -0.340 EUR/USD 1.233 0.0040 Counter TENAGA CIMB PCHEM IHH AXIATA MAXIS HLBANK SIMEPLT NESTLE PETGAS Mkt Cap. Chg (RM’mn) (RM) 88,503 67,070 64,640 50,179 49,317 46,707 38,212 37,813 35,292 35,221 0.08 0.12 0.10 0.05 0.02 0.06 0.18 0.11 5.50 0.40 While stocks may extend gains as the strong February US jobs but tame wage growth reduce inflation worries, profit-taking and selling is expected to limit upside. Immediate resistance for the index will be the recent high of 1,872, with tough hurdle expected from the 2 Feb peak of 1,880. Immediate support is revised upwards to the 30-day moving average at 1,849, next at 1,835, the 50-day ma, followed by the lower Bollinger band at 1,827, while stronger support is at 1,800. Hook-up momentum indicators on Genting Berhad implies good rebound upside, with breakout above the 61.8%FR (RM8.97) to enhance gain towards the 76.4%FR (RM9.33) and 200-day moving average (RM9.35), prior to profit-taking pause. Key retracement support from the 50%FR (RM8.68) is reinforced by the lower Bollinger band. Likewise, Genting Malaysia should regain strength, with confirmed breakout above the 50%FR (RM5.31) to aim for the 61.8%FR (RM5.54) and 76.4%FR (RM5.82) ahead, while supports are at the 38.2%FR (RM5.09) and lower Bollinger band (RM4.98). News Bites Top 10 KLCI Movers Based on Mkt Cap. (RM) @ @ @ @ @ @ @ @ @ @ % chg 1,861.22 13,110.87 15,935.35 1,863.00 Off Market SIMEPLT PCHEM KIPREIT YILAI GBH IOICORP IPMUDA XINGHE NIHSIN BARAKAH Up Down 353 217 157 85 45 50 0 5 1 2 2 1 558 360 Bursa Malaysia shares bounced back strongly on Monday, copying regional gains after the unexpectedly robust US jobs addition but tame wage growth in February reduced investor concerns on accelerating inflation. The KLCI surged 17.3 points to close near session high at 1,861.22, off an early low of 1,850.62, as gainers led losers 558 to 360 on total turnover of 2.46bn shares worth RM2.4bn. Vol. (mn) 8.72 23.20 12.64 10.67 5.29 1.35 0.48 5.05 0.36 0.41 Commodities Futures Palm Oil (RM/mt) 2,384.00 9.00 Crude Oil ($/Barrel) 61.34 -0.78 Gold ($/tr.oz.) 1,323.40 -0.60 Important Dates HSSEB - 1:10 Rights Issue - RI of up to 31.9m shares together with BI of up to 15.9m shares and up to 47.9m free detachable warrants. 1 rights share for every 10 existing shares held, at an issue price of RM1.30 per rights share, together with 1 bonus share and 3 warrants for every 2 rights shares subscribed. Application Closed: 08/03/2018. LISTING ON: 21/03/2018. • Malaysia Palm Oil Board's Feb 2018 palm oil stocks fall to four-month low at 2.48mn tonnes, still higher than consensus estimates of 2.37 2.39mn tonnes, on the back of low production. • AirAsia Bhd reaffirmed its plan to monetise its travel booking site, Expedia, involving the sale of its 25% stake in AAE Travel. • Kossan Rubber Industries Bhd has acquired 2 pieces of land in Perak measuring in total 824.1 acres for RM82.4mn cash from Perbadanan Kemajuan Negeri Perak. • Hartalega Holdings Bhd said its growth for FY18 will come organically as it invests RM250mn of capex to build a new plant. • UMW Oil & Gas Corp Bhd unit has been awarded a contract for the provision of 460K Drilling Hydraulic Workover Unit for Petronas Carigali Sdn Bhd. • T7 Global Bhd has received a Letter of Award from Petronas Carigali Sdn Bhd for an umbrella contract for the provision of a 600k hydraulic workover unit. • Lafarge Malaysia Bhd has appointed Mario Gross as President and CEO, effective 1 April 2018, succeeding Thierry Legrand. • Bermaz Auto Bhd's net profit increased 61.2% YoY RM40.5mn in 3QFY18. It was below ours but within consensus expectations. • Poh Kong Holdings Bhd saw its net profit fall 20.8% YoY to RM4.8mn in 2QFY18 on higher operating expenses. • Malaysia Airports Holdings Bhd's network of airports, including Istanbul Sabiha Gokcen Airport, recorded 10.1mn passengers in February 2018, a 7.1% growth YoY. • Ho Hup Construction Company Bhd signed a JV agreement with Koperasi Serbausaha Makmur Bhd to develop a RM180mn mixed commercial project in the prime hotel-commercial section of Kuantan. • Ekovest Bhd has received a letter of acceptance from Kuala Lumpur City Hall for the improvement and beautification works at Package 2 Taman Titiwangsa, Kuala Lumpur worth RM99.9mn. • Econpile Holdings Bhd has been awarded a contract from Putra Perdana Construction Sdn Bhd for the redevelopment of a hospital building and a 12-storey building in Kota Damansara, Selangor worth RM25.9mn. • KSL Holdings Bhd is acquiring 2 parcels of land in Tebrau, Johor, for RM133.6mn cash. • Hartalega Holdings Bhd has received approval from shareholders for its bonus issue of up to 1.7bn new shares on the basis of 1 bonus share for every 1 existing share held by shareholders. • Sedania Innovator Bhd has teamed up with Matrix Energy Sdn Bhd to jointly deliver green technology solutions to a major telco in Malaysia, aiming to achieve annual savings of 22% in energy costs. • Scomi Energy Services Bhd has appointed Hilmy Zaini Zainal as its new CEO, effective from April 1. • Jacobs Douwe Egberts Holdings Asia NL BV has extended the closing date of its takeover offer for OldTown Bhd to March 20 as the level of acceptances of the offer stood at 83.8% on March 9. • China's financing for so-called Belt and Road Initiative energy projects dropped 28% to $14.3bn last year from $19.9bn, according to data released by Boston University's Global Development Policy Center. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan, Head of Research MENARA TA ONE, 22 JALAN for TA SECURITIES HOLDINGS BERHAD (14948-M) A PARTICIPATING ORGANISATION OF BURSA MALAYSIA SECURITIES BHD P RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL : 603 - 2072 1277. FAX : 603 - 2032 5048 www.ta.com.my
3. Tuesday , March 13, 2018 FBMKLCI: 1,861.22 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Daily Brief Market View, News in Brief: Corporate, Economy, and Share Buybacks Chartist: Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my M a r k e t V i e w Profit-Taking to Check Gains Bursa Malaysia shares bounced back strongly on Monday, copying regional gains after the unexpectedly robust US jobs addition but tame wage growth in February reduced investor concerns on accelerating inflation. The KLCI surged 17.3 points to close near session high at 1,861.22, off an early low of 1,850.62, as gainers led losers 558 to 360 on total turnover of 2.46bn shares worth RM2.4bn. Resistance at 1,872, Then 1,880; Support at 1,849 While stocks may extend gains as the strong February US jobs but tame wage growth reduce inflation worries, profit-taking and selling is expected to limit upside. Immediate resistance for the index will be the recent high of 1,872, with tough hurdle expected from the 2 Feb peak of 1,880. Immediate support is revised upwards to the 30-day moving average at 1,849, next at 1,835, the 50-day ma, followed by the lower Bollinger band at 1,827, while stronger support is at 1,800. BUY Genting Berhad & Genting Malaysia Hook-up momentum indicators on Genting Berhad implies good rebound upside, with breakout above the 61.8%FR (RM8.97) to enhance gain towards the 76.4%FR (RM9.33) and 200-day moving average (RM9.35), prior to profit-taking pause. Key retracement support from the 50%FR (RM8.68) is reinforced by the lower Bollinger band. Likewise, Genting Malaysia should regain strength, with confirmed breakout above the 50%FR (RM5.31) to aim for the 61.8%FR (RM5.54) and 76.4%FR (RM5.82) ahead, while supports are at the 38.2%FR (RM5.09) and lower Bollinger band (RM4.98). Asian Markets Rally as Inflation Fears Ease A relief rally swept across Asian share markets on Monday, as trade-war concerns took a backseat to economic optimism following a U.S. jobs report Friday that showed the American economy continued to strengthen without the prior month’s rapid wage gains that stoked inflation fears. Inflationary worries faded on Friday after U.S. data showed nonfarm payrolls jumped by 313,000 jobs last month, but annual growth in average hourly earnings slowed to 2.6 percent after a spike in January. The solid job creation numbers and lower-than-expected wage growth eased worries about the Federal Reserve's rate hike trajectory. Japan’s Nikkei share average rose over 1 percent on Monday, with technology stocks posting strong gains after February’s U.S. jobs report eased fears of inflation and aggressive interest rate hikes. The Nikkei rose 1.65 percent to 21,824.03. In down under, the S&P/ASX 200 rose 0.55 percent, with gains led by the materials and energy sub-indexes, which rose 1.74 percent and 1.39 percent respectively. China stocks also extended their rally, tracking robust gains on Wall Street. The Shanghai Composite index was up 19.53 points or 0.59 percent at 3,326.70. Page 1 of 7
4. 13-Mar-18 Trade War Worries Offset US Jobs Optimism The Dow Jones average fell on Monday as investors worried a trade war could develop after President Donald Trump implemented tariffs on steel and aluminum imports . Trump implemented a 25 percent tariff on steel imports and a 10 percent charge on aluminum imports. Shares of companies such as Boeing Co, down 2.9 percent, and Caterpillar Inc, down 2.4 percent, have been under pressure as Trump’s protectionist stance on steel and aluminum imports could increase costs and hamper sales abroad. Boeing and Caterpillar were the biggest decliners on the Dow. Trump softened his stance on tariffs by exempting Canada and Mexico, and negotiations were ongoing as the European Union and Japan also seek exemptions. Concerns about possible fallout from the tariffs offset initial optimism based upon the modest wage growth numbers from Friday’s employment report that the Federal Reserve would stick to its projected three interest-rate increases in 2018. The Fed is scheduled to meet next week, with most market participants expecting the central bank to raise interest rates. Market expectations for a March rate hike stood at 86 percent on Monday, according to the CME Group's FedWatch tool. The Dow Jones Industrial Average fell 157.13 points, or 0.62 percent, to 25,178.61, the S&P 500 lost 3.55 points, or 0.13 percent, to 2,783.02, but the Nasdaq Composite added 27.52 points, or 0.36 percent, to 7,588.33. Page 2 of 7
5. 13-Mar-18 N e w s I n B r i e f Corporate AirAsia Bhd reaffirmed its plan to monetise its travel booking site , Expedia, involving the sale of its 25% stake in AAE Travel. Group CEO Tan Sri Tony Fernandes said the low-cost carrier will deliver the exercise via sale and buy back of an asset to reinforce the airline’s digital portfolio. (New Straits Times) Kossan Rubber Industries Bhd has acquired 2 pieces of land in Perak measuring in total 824.1 acres for RM82.4mn cash from Perbadanan Kemajuan Negeri Perak. Both pieces of land will be utilised by the Kossan group for its integrated glove manufacturing expansion. (Bursa Malaysia/ The Sun) Hartalega Holdings Bhd said its growth for FY18 will come organically as it invests RM250mn of capex to build a new plant. The amount is lower than FY17’s capex of RM2.2bn, which was spent on the group’s 6 manufacturing plants under the Next Generation Integrated Glove Manufacturing Complex expansion project in Sepang. (The Edge) UMW Oil & Gas Corp Bhd unit has been awarded a contract for the provision of 460K Drilling Hydraulic Workover Unit for Petronas Carigali Sdn Bhd. The contract is of an umbrella framework which provides an over-arching contractual relationship which may comprise a series of individual orders and call-outs. (Bursa Malaysia/ Bernama) T7 Global Bhd has received a Letter of Award from Petronas Carigali Sdn Bhd for an umbrella contract for the provision of a hydraulic workover unit (HWU). The duration of this contract is 3 years with a one year extension option. The scope of the contract is for the provision of a 600k HWU. (Bursa Malaysia/ Bernama) Lafarge Malaysia Bhd has appointed Mario Gross as President and CEO, effective 1 April 2018, succeeding Thierry Legrand. Gross, who began his career in Sika AG, Zurich in 2002, has vast global experience spanning 15 years in the construction material business from roles in Germany, China, Thailand and Switzerland. (Bursa Malaysia/ Bernama) Bermaz Auto Bhd’s net profit increased 61.2% RM40.5mn in 3QFY18, in line with the increased sales volume from the new CX-5 model and higher share of profit contribution from its associate company. For 9MFY18, Bermaz’s net profit eased 14.4% to RM82.9mn due to compressed gross profit margin and share of loss from Mazda Malaysia in 1HFY18. (Bursa Malaysia/ New Straits Times) Poh Kong Holdings Bhd saw its net profit fall 20.8% to RM4.8mn in 2QFY18 on higher operating expenses. For 1HFY18, Poh Kong reported a 29.7% increase in net profit to RM10.2mn from RM7.8mn in 1HFY17, while revenue grew 19.2% to RM490.9mn from RM411.8mn a year ago. (Bursa Malaysia/ The Edge) Malaysia Airports Holdings Bhd's network of airports, including Istanbul Sabiha Gokcen Airport (SGIA), recorded 10.1mn passengers in February 2018, a 7.1% growth YoY. International traffic recorded rose by 11.5% YoY, equivalent to 4.8mn passengers, while domestic traffic recorded a 3.3% YoY growth, or 5.2mn passengers. (Bursa Malaysia/ Bernama) Ho Hup Construction Company Bhd signed a JV agreement with Koperasi Serbausaha Makmur Bhd to develop a RM180mn mixed commercial project in the prime hotelcommercial section of Kuantan. The project comprises a 7-storey 3 star-rated hotel, 3 commercial office floors and a block of 23-storey services apartments, car parks and retail shops. (Bursa Malaysia/ New Straits Times) Page 3 of 7
6. 13-Mar-18 Ekovest Bhd has received a letter of acceptance from Kuala Lumpur City Hall for the improvement and beautification works at Package 2 – Taman Titiwangsa, Kuala Lumpur for the River of Life Project Phase 2 worth RM99.9mn. The completion period for the works is for 78 weeks. (Bursa Malaysia/ New Straits Times) Econpile Holdings Bhd has been awarded a contract from Putra Perdana Construction Sdn Bhd for the redevelopment of a hospital building and a 12-storey building in Kota Damansara, Selangor worth RM25.9mn. The overall duration of the contract is 15 months. (Bursa Malaysia/ New Straits Times) KSL Holdings Bhd is acquiring 2 parcels of land in Tebrau, Johor, for RM133.6mn cash. The 2 parcels of land situated in the Ulu Tiram locality are for a lease of 99 years, expiring on Jan 3, 2115. The parcels will be utilised for landed property development. (Bursa Malaysia/ The Edge) Hartalega Holdings Bhd has received approval from shareholders for its bonus issue of up to 1.7bn new shares. The bonus issue is on the basis of 1 bonus share for every 1 existing share held by shareholders. (Bursa Malaysia/ The Sun) Sedania Innovator Bhd has teamed up with Matrix Energy Sdn Bhd to jointly deliver green technology solutions to a major telco in Malaysia, aiming to achieve annual savings of 22% in energy costs. Based on the telco’s historical energy consumption of selected buildings, averaging at RM2mn per month, Sedania said the contract will target a total electrical bill saving of RM56mn for the telco over the next 10 years. (Bursa Malaysia/ The Edge) PUC Bhd’s unit RedHot Media Sdn Bhd (RHM), is collaborating with an online media company CARI Internet Sdn Bhd to roll out several cross-marketing initiatives to strengthen the companies’ foothold in their respective industries. The one-year collaboration will see RHM become the preferred advertising and media agency for CARI’s channels covering CARI online forum, website, mobile app and on-ground activations. (Bursa Malaysia/ The Sun) Managepay Systems Bhd will be providing fintech products and services, on a JV basis with MyANGKASA Holdings Sdn Bhd, for the Asean Cooperative Organization (ACO) which totals 60mn individual cooperative members. ACO formally accepted its proposal for an ACO Digital Economy EcoSystem in the development of cashless community for the entire ACO’s cooperative communities. (Bursa Malaysia/ The Sun) Scomi Energy Services Bhd has appointed Hilmy Zaini Zainal as its new CEO, effective from April 1. Hilmy, 51, will be replacing the current CEO, Shah Hakim @ Shahzanim Zain, who will be redesignated as the group’s non-executive director. (Bursa Malaysia/ The Edge) Marine & General Bhd's subsidiary, Jasa Merin (Malaysia) Sdn Bhd (JMM), has bagged 2 contracts from ExxonMobil Exploration and Production Malaysia Inc. (EMEPMI) for RM7.3mn. The contracts were for the provision of 2 Straight Supply Vessels with accommodation to support EMEPMI's operations. (Bursa Malaysia/ Bernama) Nexgram Holdings Bhd is partnering with China’s Jiangsu Tongguang Optical Cable Co Ltd (JTOCC), to carry out all-round operations in the field of wire and cable maintenance and other strategic partnership cooperation in South East Asian countries. It has entered into a strategic cooperation framework agreement with JTOCC for the partnership, which includes products research and development, distributions, projects joint venture, maintenances and supports. (Bursa Malaysia/ The Sun) Page 4 of 7
7. 13-Mar-18 Jacobs Douwe Egberts Holdings Asia NL BV (JDE) has extended the closing date of its takeover offer for OldTown Bhd to March 20. The level of acceptances of the offer stood at 83.8% on March 9. (Bursa Malaysia/ The Sun) [ TH E RE M A ININ G OF T H IS P A GE IS IN TE N TI O NA L L Y L E F T BL AN K] Page 5 of 7
8. 13-Mar-18 N e w s I n B r i e f Economy Asia Malaysia 's Debt Still Manageable, Says PM Prime Minister Datuk Seri Najib Tun Razak stressed that Malaysia's debt is still manageable and does not exceed 55% of the gross domestic product (GDP). Najib, who is also the Finance Minister, said the debt level is currently at 50.8% of GDP. "This means, our debt is still manageable and Malaysia is categorised as a country of medium debt, while compared with a number of developed countries, the government debt to the GDP there is much higher, with some exceeding 200%," he added. He said this in answer to a question from Tan Sri Dr. Muhammad Leo Michael Toyad (Mukah-BN) on the long term moves by the government in managing the country's economy, specifically the credit rating, to maintain a sustainable deficit of a low rate, as well as ensure stable growth. Najib also criticised the perception that Malaysia is a bankrupt nation. The Prime Minister said the government will continue to provide long term economic and financial planning to achieve the target of a high income advanced economy by 2020 and for the size of the economy to reach RM2 trillion in 2025. "I wish to emphasise that the government cannot take just the popular approach only. Rather, we need to be more responsible and implement what is needed to ensure a strong economic as well as financial foundation, for the benefit of the people and the generations to come,” he added. (The Star) Singapore's Retail Sales Drop 8.4% in January on Chinese New Year Effect Retail sales in the first month of 2018 got off to a poor start, but this was attributed to the Chinese New Year effect. Total sales in January declined 8.4% year-on-year from January 2017, which was when Chinese New Year was celebrated last year, according to the latest data from the Department of Statistics. Excluding motor vehicles, retail sales still fell 8.1%. Retail sales dropped 5.4% in January compared to the previous month, due mainly to the large decline in motor vehicle sales. With motor vehicles stripped out, retail sales declined by a smaller 1.5%. On a year-on-year basis, wearing apparel and footwear sales saw a dive of 17.7% - the biggest drop among the segments. This was due again to the higher sales recorded a year ago when Chinese New Year fell in January 2017. (The Business Times) China Seen Slowing Spending on Belt and Road Energy Projects China’s thirst for overseas energy investments is slaking, at least by one tally. The nation’s financing for so-called Belt and Road Initiative energy projects dropped 28% to $14.3 billion last year from $19.9 billion, according to data released by Boston University’s Global Development Policy Center. Spending last year included investments in gas pipelines in Malaysia, coal power plants in the Pakistani desert and an oil terminal in Bangladesh. China has invested about $128 billion in energy projects in Belt and Road countries since 2001, according to Boston University’s research, which tracks finance data from the country’s two policy banks, the China Development Bank and the Export-Import Bank of China. The slowdown in spending last year came as the government cracked down on capital outflows, scrutinizing companies from HNA Group Co. to Anbang Insurance Group Co. that expanded rapidly overseas. “In late 2016 and early 2017 China suffered a rush of capital outflows due to a mix of premature capital account liberalization and external conditions,” Kevin Gallagher, professor of Global Development Policy at Boston University, said by email. “This led to some fairly tight restriction on capital flows that slowed things down a bit across the board.” President Xi Jinping announced the Belt and Road Initiative project almost five years ago to rebuild the ancient Silk Road, and to extend China’s reach through Europe, Asia and Africa via infrastructure projects. It includes investments in road, railways, ports and energy ventures across more than 60 countries to open new business opportunities for domestic companies. (The Star) Page 6 of 7
9. 13-Mar-18 Japan Business Sentiment Weakens in Q1 Japan 's business survey index of large manufacturers weakened notably in the three months ended March, the quarterly survey by the Ministry of Finance and the Cabinet Office showed. The Business Survey Index, or BSI, dropped 2.9 in the three-month period to March from 9.7 in the previous three months. Similarly, the sentiment is expected to decline to -1.5 in the April to June period, while predicts a 6.1 score for the third quarter. The survey was conducted among 12,811 business enterprises on February 15. (RTT) Europe and Uni ted Kingdom UK Consumer Spending Suffers Weakest Start Since 2012 - Visa British consumers tightened their belts in February, giving the weakest start to the year since 2012, figures from payments company Visa showed on Monday, raising the prospects that the broader economy will slow in the first quarter of 2018. Visa said inflation-adjusted consumer spending in February was 1.1% lower than a year earlier, after a 1.2% decline in January. Rising living costs, lacklustre wage growth and relatively subdued consumer confidence are all likely playing a part in the ongoing reduction in household spending. British inflation hit its highest in more than five years in November, pushed up by a surge in import costs after the pound tumbled following June 2016’s Brexit vote. During the course of last year, Britain moved from being the fastest-growing major advanced economy to the slowest as consumer spending slowed and businesses held back on investment while the terms of Britain’s departure from the European Union in March 2019 remain unclear. (Reuters) Share Buy-Back 12-March 2018 Company Bought Back AJIYA AMPROP BAUTO E&O FIMACOR FITTERS GENM GRANFLO KOMARK KPJ KSL MALAKOF MASTEEL NYLEX PANTECH REXIT SUNWAY UNIMECH 25,000 30,000 30,000 105,000 9,400 1,100,000 2,000,000 80,000 34,400 264,800 323,300 3,000,000 517,000 1,000 64,100 37,300 100,000 58,000 Price (RM) Hi/ Lo (RM) 0.52 0.72 2.00 1.43/1.42 1.97 0.40/0.395 5.30/5.10 0.225/0.22 0.19/0.185 0.94 1.01 0.90/0.88 0.985/0.95 0.80/0.795 0.56 0.72/0.715 1.59 1.02/1.00 0.52 0.735/0.72 2.06/1.99 1.43/1.41 1.97/1.96 0.40/0.395 5.30/5.09 0.235/0.215 0.19/0.175 0.94/0.925 1.02/1.01 0.90/0.87 1.01/0.945 0.80/0.795 0.57/0.555 0.72/0.70 1.62/1.59 1.02/0.995 Total Treasury Shares 4,539,100 16,320,600 2,235,000 26,225,747 4,311,900 34,607,900 281,207,400 8,723,000 5,909,800 67,898,700 14,872,100 33,918,500 1,031,000 6,293,324 1,949,224 10,876,400 31,839,262 7,235,410 Source: Bursa Malaysia Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 7 of 7
10. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) % upside Recom Market Cap. (RMm) BETA EPS (sen) PER (X) Div Yield (%) FY18 FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD 12-Mar-18 AUTOMOBILE BAUTO 2.02 2.33 15.3% Buy 2,341 0.53 12.1 19.0 16.7 10.6 5.4 5.7 2.47 -18.2 1.84 9.8 -8.2 MBMR 2.43 2.68 10.3% Buy 950 0.69 24.7 26.9 9.8 9.0 2.5 2.9 2.60 -6.5 2.01 20.9 10.5 PECCA 1.30 1.62 24.6% Buy 240 0.47 9.7 10.9 13.4 11.9 3.8 3.8 1.70 -23.5 1.26 3.2 -16.1 SIME 2.64 2.55 -3.4% Sell 17,954 1.62 13.2 16.4 20.0 16.1 1.2 1.6 3.06 -13.7 2.03 30.3 19.5 UMW 6.35 5.52 -13.1% Sell 7,419 1.41 28.6 40.2 22.2 15.8 2.2 3.1 6.98 -9.0 4.70 35.1 22.1 BANKS & FINANCIAL SERVICES ABMB 4.30 4.60 7.0% Buy 6,657 1.21 32.6 35.8 13.2 12.0 3.7 3.7 4.49 -4.2 3.62 18.8 5.4 AFFIN 2.53 2.40 -5.1% Sell 4,916 0.93 22.2 23.9 11.4 10.6 3.2 3.2 2.98 -15.0 2.22 13.9 9.5 AMBANK 4.07 4.70 15.5% Buy 12,268 1.43 38.1 44.4 10.7 9.2 4.4 4.4 5.70 -28.6 3.92 3.8 -7.7 CIMB 7.27 8.60 18.3% Buy 67,070 1.65 58.2 59.9 12.5 12.1 4.0 4.1 7.39 -1.6 5.32 36.7 11.2 HLBANK 18.68 19.30 3.3% Hold 38,212 0.85 116.8 126.8 16.0 14.7 2.6 2.6 20.02 -6.7 13.42 39.2 9.9 MAYBANK 10.44 11.50 10.2% Buy 113,418 1.00 74.1 78.3 14.1 13.3 5.3 5.3 10.58 -1.3 8.73 19.6 6.5 PBBANK 23.00 27.30 18.7% Buy 88,814 0.71 153.3 166.5 15.0 13.8 2.5 2.6 23.20 -0.9 19.80 16.2 10.7 RHBBANK 5.31 6.10 14.9% Buy 21,293 1.52 54.3 59.0 9.8 9.0 2.8 2.8 5.61 -5.3 4.71 12.7 6.2 BURSA 11.20 11.80 5.4% Buy 6,020 0.90 43.9 45.0 25.5 24.9 3.2 3.2 11.48 -2.4 8.92 25.6 10.7 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 BUILDING MATERIALS ANNJOO 3.43 4.34 26.5% Buy 1,777 1.29 43.7 46.6 7.8 7.4 6.3 7.2 3.98 -13.8 2.27 51.1 -11.1 CHINHIN 1.07 1.39 29.9% Buy 595 1.00 11.4 11.1 9.4 9.6 6.0 5.3 1.49 -28.2 1.00 7.5 -11.6 ENGTEX 1.08 1.38 27.8% Buy 459 0.85 14.2 16.1 7.6 6.7 3.8 5.1 1.52 -28.9 1.01 6.9 -1.8 GADANG 0.99 1.69 71.6% Buy 650 1.15 14.2 18.1 6.9 5.4 3.0 3.0 1.37 -28.1 0.97 1.5 -11.3 GAMUDA 5.05 6.00 18.8% Buy 12,409 0.84 34.5 35.6 14.6 14.2 2.4 2.4 5.52 -8.5 4.58 10.3 1.8 IJM 2.68 2.89 7.8% Sell 9,723 1.20 13.7 18.2 19.5 14.8 3.5 3.5 3.61 -25.8 2.55 5.1 -12.1 CONSTRUCTION KAB 0.26 0.38 44.2% Buy 8 na 31.4 37.3 0.8 0.7 3.8 4.6 0.33 -21.2 0.25 6.1 -13.3 PESONA 0.38 0.46 21.1% Buy 264 1.15 5.0 4.5 7.7 8.4 3.9 3.9 0.74 -48.3 0.36 5.6 -15.6 -11.6 SENDAI 0.77 0.55 -28.1% Sell 597 1.25 9.1 8.5 8.4 9.0 1.3 1.3 1.39 -45.0 0.58 33.0 SUNCON 2.15 2.65 23.3% Hold 2,778 0.59 14.7 16.4 14.6 13.1 3.7 4.2 2.64 -18.6 1.71 25.7 -14.3 WCT 1.39 1.50 7.9% Sell 1,956 0.97 11.3 10.8 12.3 12.8 2.2 2.2 2.48 -43.8 1.35 3.0 -14.2 LITRAK 5.60 6.26 11.8% Hold 2,956 0.33 45.6 47.1 12.3 11.9 4.5 4.5 6.15 -8.9 5.40 3.7 0.9 CARLSBG 20.64 18.09 -12.4% Buy 6,349 0.71 87.8 91.8 23.5 22.5 4.2 4.3 20.64 0.0 14.34 43.9 34.9 HEIM 22.22 21.64 -2.6% Hold 6,713 0.41 93.0 101.6 23.9 21.9 3.4 3.6 22.24 -0.1 16.98 30.9 17.6 AEON 1.84 1.97 7.1% Buy 2,583 0.21 7.5 8.9 24.4 20.6 2.4 2.7 2.52 -27.0 1.45 26.9 4.5 AMWAY 7.50 8.59 14.5% Buy 1,233 0.47 48.3 49.9 15.5 15.0 5.3 5.5 8.10 -7.4 6.97 7.6 2.7 F&N 31.70 33.74 6.4% Buy 11,619 0.25 122.7 145.8 25.8 21.7 2.5 3.0 31.84 -0.4 23.40 35.5 17.4 CONSUMER Brewery Retail HUPSENG 1.11 1.25 12.6% Buy 888 0.41 5.7 5.9 19.5 18.8 5.4 5.4 1.28 -13.3 1.05 5.7 1.8 JOHOTIN 1.02 1.48 45.1% Buy 317 1.03 11.1 12.0 9.2 8.5 5.9 6.4 1.76 -42.0 1.00 2.0 -15.7 NESTLE 150.50 129.90 -13.7% Hold 35,292 0.44 322.2 360.2 46.7 41.8 2.0 2.2 150.80 -0.2 76.40 97.0 45.8 PADINI 5.01 4.67 -6.8% Sell 3,296 0.83 28.0 30.4 17.9 16.5 2.5 2.6 5.50 -8.9 2.86 75.3 -5.1 POHUAT 1.52 2.01 32.2% Buy 334 0.61 22.9 25.4 6.6 6.0 5.3 5.3 2.07 -26.5 1.43 6.3 -15.1 QL 4.95 5.41 9.3% Hold 8,031 0.60 12.8 14.7 38.6 33.6 0.9 1.0 4.98 -0.6 3.45 43.6 13.8 SIGN 0.62 0.92 48.4% Buy 142 0.59 6.9 9.2 8.9 6.8 4.0 5.6 1.07 -42.1 0.57 8.8 -12.1 27.00 34.72 28.6% Hold 7,709 1.46 170.8 168.8 15.8 16.0 5.9 5.9 49.00 -44.9 26.50 1.9 -32.5 GENTING 8.99 11.58 28.8% Buy 34,445 1.43 55.1 61.8 16.3 14.5 1.8 1.8 9.92 -9.4 8.63 4.1 -1.5 GENM 5.30 6.68 26.0% Buy 29,992 1.43 27.6 32.0 19.2 16.6 2.3 2.5 6.28 -15.6 4.80 10.5 -4.4 2.14 3.34 56.1% Buy 2,883 0.61 21.5 26.0 9.9 8.2 7.5 8.4 2.98 -28.2 2.13 0.5 -4.5 CCMDBIO 2.86 3.40 18.9% Buy 798 0.93 16.2 17.4 17.7 16.5 3.7 3.9 3.05 -6.2 1.97 45.2 13.0 IHH 6.09 6.40 5.1% Sell 50,179 0.76 11.9 15.0 51.3 40.7 0.5 0.6 6.33 -3.8 5.42 12.4 3.9 KPJ 0.94 1.13 20.9% Buy 3,940 0.56 3.9 4.4 23.9 21.5 2.4 2.6 1.14 -18.0 0.87 7.5 -3.6 HARTA 11.80 7.80 -33.9% Sell 19,535 1.16 25.2 28.8 46.9 40.9 1.3 1.5 12.18 -3.1 4.71 150.5 10.5 KOSSAN 8.15 9.73 19.4% Buy 5,212 0.62 37.4 42.1 21.8 19.4 2.3 2.6 8.79 -7.3 5.62 45.0 0.5 SUPERMX 2.74 2.70 -1.5% Buy 1,796 0.65 20.0 22.6 13.7 12.1 1.9 2.2 2.74 0.0 1.69 62.1 37.0 TOPGLOV 9.68 9.35 -3.4% Sell 12,158 0.73 35.1 42.4 27.5 22.8 1.5 1.8 10.24 -5.5 4.56 112.3 21.2 KAREX 0.85 0.93 9.4% Sell 852 0.86 1.8 3.0 48.0 28.1 0.5 0.9 2.26 -62.4 0.79 8.3 -34.6 SCIENTX 8.30 10.01 20.6% Buy 4,058 0.84 67.5 79.4 12.3 10.5 2.5 3.1 9.85 -15.7 7.23 14.8 -4.2 SKPRES 1.58 2.20 39.2% Buy 1,975 0.93 10.4 14.8 15.2 10.7 3.3 4.7 2.35 -32.8 1.24 27.4 -30.7 ASTRO 2.38 3.10 30.3% Buy 12,409 0.85 14.0 13.7 17.1 17.4 5.5 5.7 2.94 -19.0 2.30 3.5 -10.2 MEDIA PRIMA 0.44 0.45 3.4% Sell 483 1.28 -3.8 -1.7 na na 0.0 0.0 1.28 -66.0 0.43 2.4 -42.8 STAR 1.30 1.20 -7.7% Sell 959 1.05 6.2 5.9 20.9 21.9 6.9 6.9 2.22 -41.4 1.29 0.8 -21.2 Tobacco BAT GAMING Casino NFO BJTOTO HEALTHCARE Hospitals/ Pharmaceutical Rubber Gloves INDUSTRIAL MEDIA
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) % upside Recom Market Cap. (RMm) BETA EPS (sen) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.42 0.72 71.4% Buy 738 1.66 4.2 4.5 10.0 9.3 2.4 2.4 0.69 -39.1 0.38 10.5 LCTITAN 6.33 6.10 -3.6% Buy 14,388 na 56.3 60.9 11.2 10.4 3.9 4.3 6.53 -3.1 4.14 52.9 -13.4 34.7 MHB 0.72 0.81 12.5% Sell 1,152 1.45 0.5 1.7 149.9 43.2 0.0 0.0 1.16 -37.9 0.63 15.2 -12.7 MISC 6.99 7.00 0.1% Sell 31,202 1.13 50.1 53.8 14.0 13.0 4.3 4.3 7.90 -11.5 6.73 3.9 -5.8 PANTECH 0.57 0.69 22.1% Buy 421 1.28 6.1 6.8 9.3 8.3 4.9 5.4 0.74 -23.6 0.51 10.8 -12.4 PCHEM 8.08 8.84 9.4% Hold 64,640 0.86 52.5 53.8 15.4 15.0 3.2 3.2 8.29 -2.5 6.80 18.8 4.9 SAPNRG 0.47 1.25 168.8% Buy 2,786 2.12 -6.5 -5.0 na na 0.0 0.0 2.10 -77.9 0.45 3.3 -34.5 SERBADK 3.40 4.15 22.1% Buy 4,993 na 27.7 31.5 12.3 10.8 2.6 2.9 3.68 -7.6 1.63 108.6 4.9 UMWOG 0.31 0.39 27.9% Buy 2,506 1.86 0.4 1.2 79.9 26.3 0.0 0.0 0.68 -55.0 0.27 13.0 0.0 UZMA 1.43 1.57 9.8% Hold 458 0.82 12.9 13.9 11.1 10.3 0.0 0.0 1.98 -27.8 1.26 13.5 11.7 FGV 1.84 1.98 7.6% Sell 6,713 1.66 3.5 4.4 53.3 42.2 2.7 2.7 2.18 -15.6 1.51 21.9 8.9 IJMPLNT 2.28 2.25 -1.3% Sell 2,008 0.18 6.7 10.8 33.8 21.1 3.5 3.9 3.24 -29.6 2.21 3.2 -16.8 IOICORP 4.85 5.08 4.7% Buy 30,477 0.92 20.9 21.6 23.2 22.4 6.1 3.6 4.88 -0.6 4.31 12.5 6.8 KFIMA 1.54 1.89 22.7% Buy 435 0.68 14.1 14.7 10.9 10.5 5.8 5.8 1.96 -21.4 1.45 6.2 -1.9 KLK 25.40 27.07 6.6% Hold 27,050 0.65 120.7 125.7 21.0 20.2 2.4 2.4 25.78 -1.5 23.66 7.4 1.6 SIMEPLT 5.56 6.25 12.4% Buy 37,813 na 21.0 22.1 26.4 25.2 2.5 2.7 6.00 -7.3 4.58 21.4 -7.3 TSH 1.59 1.97 23.9% Buy 2,195 0.49 9.3 9.6 17.1 16.6 1.5 1.5 1.90 -16.3 1.53 3.9 -3.6 UMCCA 6.22 6.73 8.2% Sell 1,304 0.40 22.7 34.8 27.4 17.9 2.7 2.9 7.08 -12.1 5.77 7.8 -4.5 GLOMAC 0.51 0.46 -9.8% Sell 405 0.76 3.0 4.4 17.2 11.5 3.9 3.9 0.67 -24.2 0.50 3.0 -8.0 HUAYANG 0.55 0.58 5.5% Sell 194 0.87 0.7 3.4 82.9 16.2 0.9 0.9 1.16 -52.6 0.54 1.9 -9.8 IBRACO 0.66 0.80 22.1% Buy 325 na 7.2 10.7 9.0 6.1 4.6 6.1 0.98 -32.8 0.50 31.0 -19.6 IOIPG 1.82 2.00 9.9% Sell 10,021 0.83 16.3 15.7 11.1 11.6 3.3 3.3 2.22 -18.0 1.79 1.7 -1.6 MAHSING 1.13 1.59 40.7% Buy 2,743 0.92 11.8 11.3 9.6 10.0 5.8 5.8 1.64 -31.1 1.10 2.7 -22.1 PLANTATIONS PROPERTY SIMEPROP 1.37 1.51 10.2% Hold 9,317 na 7.5 7.5 18.2 18.3 2.9 2.2 1.78 -23.0 1.04 31.7 -23.0 SNTORIA 0.66 0.76 15.2% Buy 371 0.14 8.3 8.6 8.0 7.7 1.5 1.5 0.91 -27.4 0.56 17.9 -5.0 SPB 4.52 5.10 12.8% Hold 1,553 0.60 18.7 24.0 24.1 18.8 2.7 2.7 5.50 -17.8 4.39 3.0 -7.8 SPSETIA 3.20 3.73 16.6% Buy 12,010 0.92 19.8 19.4 16.2 16.5 3.8 3.8 4.38 -27.0 3.07 4.2 -20.0 SUNWAY 1.62 1.75 8.0% Hold 7,917 0.91 11.8 12.4 13.7 13.0 3.7 3.7 1.96 -17.3 1.33 21.6 -0.6 SUNREIT 1.67 1.87 12.0% Hold 4,918 0.87 10.0 10.7 16.7 15.6 6.0 6.4 1.90 -12.1 1.63 2.5 -12.1 CMMT 1.05 1.48 41.0% Buy 2,140 0.75 7.8 8.3 13.4 12.7 7.7 8.2 1.83 -42.6 0.98 7.1 -42.6 REIT POWER & UTILITIES MALAKOF 0.90 0.82 -8.9% Sell 4,467 0.97 6.6 7.2 13.6 12.5 7.8 7.8 1.30 -30.8 0.86 5.3 -8.2 PETDAG 24.86 24.08 -3.1% Sell 24,697 0.48 114.7 116.3 21.7 21.4 3.5 3.5 25.97 -4.3 20.81 19.4 3.4 PETGAS 17.80 19.46 9.3% Buy 35,221 0.87 99.3 100.0 17.9 17.8 3.9 3.9 20.08 -11.4 15.82 12.5 1.8 TENAGA 15.62 18.22 16.6% Buy 88,503 0.56 131.3 127.5 11.9 12.3 4.2 4.0 16.12 -3.1 13.44 16.2 2.4 YTLPOWR 1.06 1.16 9.4% Sell 8,405 0.93 8.6 8.9 12.3 11.9 4.7 4.7 1.50 -29.3 1.05 1.0 -17.8 -0.7 TELECOMMUNICATIONS AXIATA 5.45 6.50 19.3% Buy 49,317 1.55 15.9 19.4 34.2 28.0 1.5 2.9 5.82 -6.4 4.54 20.0 DIGI 4.75 5.15 8.4% Hold 36,931 0.97 19.7 20.4 24.1 23.3 4.1 4.3 5.19 -8.5 4.36 8.9 -6.9 MAXIS 5.98 6.05 1.2% Sell 46,707 1.09 25.2 25.0 23.7 23.9 3.3 3.3 6.60 -9.4 5.48 9.1 -0.5 TM 5.73 7.20 25.7% Buy 21,533 0.67 22.8 24.9 25.1 23.1 3.6 3.9 6.69 -14.3 5.49 4.4 -9.0 ELSOFT 2.60 3.30 26.9% Buy 715 0.90 13.1 15.0 19.8 17.4 3.5 4.0 2.95 -11.9 1.68 54.7 -3.7 IRIS 0.19 0.22 15.8% Buy 470 2.50 0.0 0.3 690.7 60.0 0.0 0.0 0.25 -22.4 0.12 58.3 2.7 INARI 3.22 3.65 13.4% Buy 6,656 0.77 13.7 15.3 23.4 21.0 3.1 3.4 3.82 -15.7 1.88 71.6 -5.3 TECHNOLOGY Semiconductor & Electronics Note: INARI proposed bonus issue shares on the basis of 1 for 2. For more detail please refer to 30.01.18 report. MPI 9.00 10.70 18.9% Buy 1,790 0.90 73.9 86.9 12.2 10.4 3.6 3.6 14.52 -38.0 8.42 6.9 -28.7 UNISEM 2.76 2.70 -2.2% Sell 2,025 1.14 19.0 20.3 14.5 13.6 4.3 4.3 4.25 -35.1 2.49 10.8 -24.4 TRANSPORTATION Airlines AIRASIA 4.08 4.93 20.8% Hold 13,635 1.11 49.3 49.3 8.3 8.3 2.0 2.0 4.75 -14.1 2.77 47.3 21.8 AIRPORT 8.78 8.61 -1.9% Sell 14,568 1.20 18.0 18.8 48.9 46.7 1.5 1.1 9.45 -7.1 6.87 27.8 -0.1 Freight & Tankers PTRANS 0.28 0.46 67.3% Buy 346 na 2.3 3.8 11.8 7.3 2.5 4.0 0.38 -28.0 0.18 55.1 -1.8 TNLOGIS 1.11 1.45 30.6% Buy 507 1.03 10.3 10.5 10.8 10.5 4.5 4.5 1.83 -39.5 1.08 2.8 -17.2 WPRTS 3.56 4.06 14.0% Buy 12,140 0.45 15.6 20.0 22.8 17.8 1.1 1.4 4.19 -15.0 3.12 14.1 -3.8 SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) % upside Recom Market Cap. (S$m) Beta EPS (cent) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52week 52week % Chg High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 28.74 30.50 6.1% Buy 73,686 1.13 212.3 246.0 13.5 11.7 2.3 2.4 29.7 -3.3 18.47 55.6 OCBC 13.44 14.30 6.4% Buy 56,244 1.21 109.5 123.2 12.3 10.9 6.7 7.7 13.6 -1.2 9.45 42.2 15.7 8.5 UOB 28.77 27.80 -3.4% Hold 47,815 1.18 216.6 244.0 13.3 13.3 2.8 2.8 28.8 -0.2 21.36 34.7 8.8 PLANTATIONS WILMAR 3.22 3.31 2.8% Hold 20,603 0.80 27.4 29.3 11.7 11.0 3.1 3.4 3.9 -16.8 2.97 8.4 4.2 IFAR 0.33 0.36 10.8% Hold 466 0.97 3.8 4.1 8.6 7.9 1.6 1.7 0.5 -40.4 0.32 1.6 -16.7 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
12. RESULTS UPDATE Tuesday , March 13, 2018 FBMKLCI: 1,861.22 Sector: Automotive THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM2.33 (+15.3%) Bermaz Auto Berhad Last Traded: RM2.02 A Surge in Earnings QoQ Abel Goon Tel: +603-2072 1277 ext. 1641 BUY abelgoon@ta.com.my Review Bermaz Auto Bhd (BAuto) registered 9MFY18 core net profit of RM82.9mn (YoY: -14.4%), which came in below ours but within consensus’ expectations at 50% and 59% of estimates respectively. The lower than expected earnings was a result of 1) lower than expected associates’ income and 2) lower than expected margins. We had previously estimated the new CX-5 launch to contribute massively to 2HFY18. Nevertheless, we believe the earnings recognition from the CX-5 launch is merely delayed and expect a record high net profit in 4QFY18. To recap, associates’ income increases with higher demand for the CX-5 as both Mazda Malaysia and Inokom assemble and manufacture for the export and domestic market. 3QFY18 earnings grew by 82.3% QoQ and 61.2% YoY on the back of 1) higher associates income (>+100% QoQ, >+100% YoY) 2) and increased volumes (+15.5% QoQ, +56.2% YoY). Note that associates income in 3QFY18 was a record high quarterly contribution. Volume growth in Malaysia was driven by the new CX-5 launch which made up 57% of its sales in 3QFY18. On the other hand, volume growth in Philippines was driven by new CX-5 and CX-9 launches. That said, we understand that the waiting period to obtain the new CX-5 is rather lengthy given the surge in demand coupled with limited supply. Thus, we do not discount the possibility of customers cancelling their orders when given the choice. BAuto declared second interim dividend of 2.3 sen for 3QFY18. This implies YTD payout of 75% core net profit. We expect BAuto to pay out a large dividend in 4QFY18 given its massive cashpile and expected surge in net profit. Impact We reduce our margins for both Malaysia and Philippines in-line with the historical results and reduce associates income to reflect a more conservative outlook. Thus, earnings are reduced by 15.1%/4.2%/5.2% in FY18/19/20. Outlook We expect 4QFY18 to be the best quarter for BAuto in FY18 underpinned by the new CX-5 launch in 3QFY18, which has received many positive reviews. Note that the CX-5 was only launched in endOctober but Mazda’s December figures were lacklustre due to other marques offering hefty discounts. Furthermore, the gradually reducing JPY/MYR rate will present upside to BAuto’s earnings as in expands its margins. Note that 30% of BAuto’s costs are denoted in JPY. Going forward, we expect BAuto to continue paying out generous www.taonline.com.my Share Information Bloomberg Code BAUTO MK Stock Code 5248 Listing Main Market Share Cap (mn) 1158.8 Market Cap (RMmn) 2340.7 52-wk Hi/Lo (RM) 2.47/1.84 12-mth Avg Daily Vol ('000 shrs) 1452 Estimated Free Float (%) 61.6 Beta 0.3 Major Shareholders (%) Dynamic Mile. - 15.0 EPF - 13.0 PNB - 11.7 Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 (15.1) (4.2) 140.3 220.4 140.0 208.9 100 105 Buy (Maintain) Financial Indicators Net Debt / Equity (%) CFPS (sen) Price / CFPS (x) ROA (%) NTA/Share (RM) Price/NTA (x) FY18 Net Cash 17.9 11.3 12.5 0.4 4.7 FY19 Net Cash 17.0 11.9 13.6 0.5 4.5 % of FY 50 59 Below Within Scorecard vs TA vs Consensus Share Performance (%) Price Change BAUTO FBM KLCI 1 mth (6.9) 1.5 3 mth (6.5) 7.1 6 mth (0.5) 4.2 12 mth 1.0 8.1 (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 3
13. 13-Mar-18 dividends . This is underpinned by 1) subdued capex requirements; 2) large cash pile of circa RM280mn and 3) special dividend arising from the listing of its Philippines division. Valuation After the earnings adjustments, we arrive at a lower TP of RM2.33 based on unchanged 14x CY18 PER. Maintain Buy. The group’s handsome dividend yield of 5.4%-6.7% for FY18-20 will cushion any downside risk. Figure 1: Quarterly Results Analysis FYE 30 April Revenue EBIT Net Int Inc EI Associates Pretax Taxation MI Net Profit Core net profit 3QFY18 559.4 51.6 (0.9) 0.0 6.5 57.2 (12.9) (3.8) 40.5 40.5 Core EPS DPS (sen) (sen) EBIT Margin Pretax Margin Net Margin Tax Rate Sales Volume 2QFY18 QoQ (%) 471.7 18.6 35.5 45.6 (1.1) (17.2) 0.0 n.m. 0.2 >100 34.6 65.4 (9.1) 42.2 (3.3) 15.8 22.2 82.3 22.2 82.3 3.5 2.3 1.9 1.6 (%) (%) (%) (%) 9.2 10.2 7.2 22.6 7.5 7.3 4.7 26.3 (unit) 4,579 3,965 3QFY17 338.7 39.5 (0.6) 0.0 0.1 39.0 (10.5) (3.3) 25.1 25.1 81.3 43.8 2.2 2.8 YoY (%) 65.2 30.7 38.7 n.m. >100 46.9 22.7 15.1 61.2 61.2 59.8 (16.4) 11.7 11.5 7.4 27.1 15.5 2,932 2018E 1,992.9 191.5 9.6 208.9 140.3 140.3 12.2 19.3 2019F 2,329.3 308.0 13.2 328.1 220.4 220.4 19.2 57.0 56.2 9MFY18 1,422.3 119.3 (3.1) 0.0 7.3 123.6 (30.6) (10.1) 82.9 82.9 9MFY17 1,305.5 134.3 1.2 0.0 8.5 143.9 (36.1) (11.0) 96.8 96.8 7.2 5.4 8.5 8.5 8.4 8.7 5.8 24.8 10.3 11.0 7.4 25.1 11,981 11,524 YoY (%) 9.0 (11.1) n.m. n.m. (13.4) (14.2) (15.3) (8.1) (14.4) (14.4) (15.0) (36.5) 4.0 Figure 2: Earnings Summary FYE 30 April (RM mn) Revenue EBITDA EBITDA margin (%) Pretax Profit Reported Net Profit Core Net Profit Core EPS (sen) Core EPS growth (%) Core PER DPS Dividend Yield (x) (sen) (%) 2016 2,095.4 267.8 12.8 278.3 197.6 197.6 17.3 (6.9) 11.7 16.9 8.4 2017 1,660.0 166.5 10.0 175.2 117.6 117.6 10.3 (40.8) 19.7 11.7 5.8 16.5 10.9 5.4 10.5 11.5 5.7 2020F 2,590.6 361.4 14.0 384.7 258.4 258.4 22.4 16.6 9.0 13.4 6.7 Page 2 of 3
14. 13-Mar-18 (TH I S P A GE IS IN TE N TI ON AL L Y L E F T B L AN K ) Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Tuesday, March 13, 2018, the analyst, Abel Goon, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 3 of 3
15. COMPANY UPDATE Tuesday , March 13, 2018 FBMKLCI: 1,861.22 Sector: Transportation THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Malaysia Airports Holdings Berhad TP: RM8.61 (-1.9%) Last Traded: RM8.78 Seasonally Strong CNY Traffic Tan Kam Meng, CFA SELL Tel: +603-2167 9605 kmtan@ta.com.my Feb-18’s volume grew 4.7% YoY MAHB’s Feb-18 operating data depicts a seasonally strong traffic volume during the Lunar Chinese New. The total passenger movement in Feb-18 surged 4.7% YoY to 7.7mn passengers (see Figure 1), led by the international segment, which grew 10.7% (see Figure 3). Surprisingly, the domestic segment recorded a contraction of 1.3% growth YoY in Feb-18 (see Figure 4), despite a full-month impact of Chinese New Year in Feb-18 as compared to an early CNY in 2017. Management attributed this to a reduction in domestic airlines’ seats offered during the season and one lesser day of operations in Feb-18, i.e.: 28 days. www.taonline.com.my Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) Par Value 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) MAHB MK 5014 Main Market 1659.2 14567.8 1.0 9.45/6.35 3906.0 56.2 1.2 Khazanah -33.2 EPF - 10.6 Figure 1 – Feb-18 passenger movement expanded 4.7% mn 10.0 20.0% 15.0% 8.0 10.0% 6.0 5.0% 4.0 Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 0.0 0.0 299.9 315.6 388.8 513.7 77.1 61.4 Sell (Maintained) 0.0% International Domestic Jan-18 Oct-17 Jul-17 Apr-17 Jan-17 Oct-16 Jul-16 Apr-16 Jan-16 Oct-15 -10.0% Jul-15 - Apr-15 -5.0% Jan-15 2.0 Growth Source: MAHB & TA Research Cumulatively, 2M18 passenger movement expanded to 3.0% YoY from 1.5% a month ago. According to announcement, South East Asia, and the Middle East sectors registered positive growth in passenger movement. Importantly, there was a 39.1% increase in Chinese nationality passengers during the CNY period. We consider this as within expectation and thus maintaining our 2018 growth assumption of 3% versus management guidance of 6.3%. Financial Indicators Net Gearing (%) CFPs (sen) P/CFPS (x) ROE (%) NTA/Share (RM) Price/NTA (x) FY18 6.9 173.8 5.1 3.3 (4.5) nm Share Performance (%) Price Change MAHB 1 mth 4.5 3 mth 5.3 6 mth (0.6) 12 mth 26.7 FY19 2.1 35.6 24.6 3.3 (4.1) nm FBM KLCI 1.5 7.1 4.2 8.1 (12-Mth) Share Price relative to the FBMKLCI Growth in ISG’s passenger remained strong at 15.5% in Feb-18 Istanbul Sabiha Gokcen (ISG) airport recorded a passenger growth of 15.5% YoY (-12.0% MoM) to 2.4mn passengers in Feb-18. This was underpinned by both the international (+15.8% YoY) and domestic (+15.4%) segments (see Figure 5 & 6). However, despite a strong cumulative growth of 20.5% (vs. TA’s forecast of 10%) YoY for 2M18, we do not expect ISG to turnaround in 2018. Source: Bloomberg Page 1 of 4
16. 13-Mar-18 Figure 2 – ISG’s passenger rose 15.5% in Feb-18 3500 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% 3000 2500 2000 1500 1000 500 0 International Domestic Growth Source: MAHB & TA Research Outlook MAHB’s earnings prospect is encouraging on the back of: 1) increase in capacity by Malaysian airline operators, especially AirAsia; 2) potential increase in non-aeronautical contribution typically from duty-free sales and rental income; and 3) development within Aeropolis. Other supporting factors to 2018 traffic volume from a high base include: 1) opening of 20th Century Fox theme park in Genting Highlands this year which will likely attract “must-see” foreign visitation; and 2) a short term effect from 14th general election, which would temporary boost domestic traffic volume during the election campaign period. Forecast Maintained. Valuation We continue to believe MAHB is trading at an expensive forward PE of 55x, given its small earnings base and tiny dividend yield. Maintain Sell on MAHB with unchanged DCF valuation of RM8.61/share, based on a discount rate of 10.7%. FCFE FCFE valuation Rf Rm Beta CAP M P V of future F CF E - P erpectua l S ukuk S ha re outs ta nding (mn s ha re) FCFE/s hare 3% 9% 1.28 10.7% 15287.6 1000.0 1659.19 8.61 Page 2 of 4
17. 13-Mar-18 Figure 3 : Malaysia’s Int. passenger grew 10.7% in Feb-18 Figure 4: Malaysia’s Dom. passengers slipped 1.3% in Feb18 mn 25.0% 20.0% 4.0 15.0% Figure 5: ISG’s Int. passenger rose 15.8% in Feb-18 Pass. Movement (LHS) Jan-18 Sep-17 Figure 6: ISG’s Dom. passenger rose 15.4% in Feb-18 '000 2500 '000 1200 Nov-17 -10.0% Jul-17 2.5 May-17 -5.0% Mar-17 3.0 Jan-16 Jan-18 Sep-17 Nov-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 Mar-16 May-16 0.0% Jan-17 0.0% -5.0% Jan-16 - 5.0% 3.5 YoY growth (RHS) 1000 800 YoY growth (RHS) 40% 30% 2000 30% 20% 1500 20% 1000 10% 500 0% 10% 600 0% 400 Pass. Movement (LHS) 200 -10% 0 -20% Jan-18 Oct-17 Jul-17 Apr-17 Jan-17 Oct-16 Jul-16 Jan-16 Apr-16 Apr-15 -10% Jan-15 Jan-18 Oct-17 Jul-17 Apr-17 Jan-17 Oct-16 Jul-16 Apr-16 Jan-16 Jul-15 Oct-15 Apr-15 Jan-15 0 Oct-15 1.0 10.0% 4.0 10.0% 5.0% 1.7 1.7 1.8 1.7 1.8 1.7 1.9 1.8 1.7 1.8 1.8 2.1 1.9 1.8 1.9 2.0 1.9 1.9 2.1 2.0 1.9 2.0 1.9 2.3 2.1 1.9 2.0 20.0% 15.0% Jul-15 3.0 YoY growth (RHS) 4.5 Nov-16 1.8 1.7 1.8 1.7 1.7 1.6 2.0 2.0 1.9 1.8 1.8 2.3 2.1 1.9 2.0 2.1 2.1 1.9 2.2 2.4 2.0 2.1 2.1 2.5 2.4 2.1 5.0 Pass. Movement (LHS) Sep-16 YoY growth (RHS) Jul-16 Non-ASEAN May-16 ASEAN 5.0 Mar-16 'mn 6.0 Source: MAHB & TA Securities Page 3 of 4
18. 13-Mar-18 Income Statement (RM'mn) FYE 31 Dec R evenue E B ITDA Dep & Amor E B IT Net F ina ncing Cos t As s ocia te & J V EI P BT Ta x P AT Core Net Profit 2016 4172.8 1709.9 (852.5) 857.4 (689.8) 15.7 (28.6) 211.9 (110.2) 70.4 99.0 2017 4594.4 1910.9 (880.8) 1030.0 (716.2) 20.6 (51.4) 385.9 (97.4) 236.5 287.9 Core E P S (s en) E P S g rowth (% ) P E (x) GDP S (s en) Dividend yield (% ) 1.3 >100 664.3 10.0 1.1 13.2 896.6 66.7 13.0 1.5 P BT Dep & Amor Cha ng es in WC Others CFO 2016 183.3 852.5 200.2 534.8 1770.9 2017 334.5 880.8 160.0 624.8 2000.1 2018F 604.2 921.0 2076.6 126.5 3728.3 2019F 389.6 993.8 123.5 159.1 1666.0 2020F 571.8 1019.7 85.1 31.9 1708.5 Ca pex Others CFI (430.5) 136.6 (293.9) (418.4) 260.6 (157.7) (668.4) 295.3 (373.1) (418.4) 0.0 (418.4) (418.4) 0.0 (418.4) (141.0) 0.0 0.0 (1074.3) (1215.3) (215.7) 0.0 (30.5) (777.0) (1023.2) (217.0) 10.0 0.0 (710.3) (917.3) (167.9) 10.0 (423.3) (640.5) (1221.7) (167.9) 0.0 (1000.0) (601.4) (1769.3) 261.7 354.2 0.2 819.2 828.4 0.5 25.9 591.2 0.4 (479.2) 115.2 0.1 2016 88.8 811.6 12.4 239.5 2017 96.3 879.7 13.2 255.3 2019F 104.1 933.3 14.4 284.3 2020F 107.2 961.3 14.8 298.0 Cas h Flow (RM'mn) FYE 31 Dec Dividend E quity ra is ed Net B orrowing Others CFF Net Increa s e/(Decrea s e) in Ca s h F CF E F CF /s ha re (R M) Key As s umptions FYE 31 Dec Tota l P a s s eng er Growth (mn) Aircra ft movement ('000) E ra ma n S a les / pa x (R M) R enta l - KLIA & KLIA 2 (R M'mn) 2018F 4676.8 1960.2 (921.0) 1039.2 (710.3) 20.2 255.1 349.1 (49.2) 555.0 299.9 16.1 22.3 54.5 13.0 1.5 2437.9 2884.3 1.7 2018F 99.1 906.1 14.0 272.1 2019F 4995.7 2001.7 (993.8) 1007.9 (640.5) 22.2 0.0 389.6 (74.0) 315.6 315.6 15.4 (4.6) 57.1 10.0 1.1 2020F 5228.2 2168.5 (1019.7) 1148.8 (601.4) 24.4 0.0 571.8 (143.0) 428.9 428.9 22.1 43.9 39.7 10.0 1.1 Balance Sheet (RM'mn) FYE 31 Dec PPE Inta ng ibles Others Non-current As s ets 2016 381.7 17,231.0 1,086.1 18,698.8 2017F 354.4 17,405.1 1,336.1 19,095.6 2018F 615.4 16,895.2 1,312.4 18,823.0 2019F 597.7 16,341.3 1,330.7 18,269.8 2020F 582.0 15,759.8 1,351.1 17,692.9 Inventories Tra de R ecb. Others Ca s h Current As s ets 135.2 871.6 11.1 1,571.9 2,589.8 140.6 791.9 10.2 2,461.0 3,403.7 192.2 999.4 10.2 4,898.9 6,100.7 205.3 1,081.3 10.2 4,924.8 6,221.6 214.9 1,145.9 10.2 4,445.6 5,816.6 Total As s ets 21,288.6 22,499.2 24,923.7 24,491.3 23,509.5 S ha re Ca pita l S ha re P remium Others R eta ined E a rning s MI Total Equity 1,659.2 3,455.1 1,259.3 2,321.2 2.0 8,696.9 1,659.2 3,455.1 1,576.9 2,320.2 0.0 9,011.4 1,669.2 3,455.1 1,576.9 2,658.2 0.0 9,359.4 1,679.2 3,455.1 1,576.9 2,805.9 0.0 9,517.1 1,679.2 3,455.1 1,576.9 3,066.8 0.0 9,778.0 Borrowing s Other Non-current Lia bilities 5,386.1 5,439.8 10,825.9 5,126.0 6,128.1 11,254.2 5,126.0 6,128.1 11,254.2 4,126.0 6,128.1 10,254.2 4,126.0 6,128.1 10,254.2 Borrowing s T. P a ya bles a nd other Current Lia bilites 193.6 1,572.1 1,765.8 423.3 1,810.4 2,233.7 423.3 3,886.8 4,310.1 1,000.0 3,720.1 4,720.1 0.0 3,477.3 3,477.3 Total Liabilities 12,591.7 13,487.8 15,564.2 14,974.2 13,731.5 NTA/s ha re (R M) P /NTA (x) E V/E B ITDAR (x) (5.1) nm 10.9 (5.1) nm 9.2 (4.5) nm 7.8 (4.1) nm 7.5 (3.6) nm 6.7 Ratios FYE 31 Dec Profitability 2016 2017F 2018F 2019F 2020F E B ITDA ma rg in (% ) Core profit ma rg in (% ) R OE (% ) R OA (% ) 41.0 2.4 1.1 0.5 41.6 6.3 3.3 1.3 41.9 6.4 3.3 1.3 40.1 6.3 3.3 1.3 41.5 8.2 4.4 1.8 Current R a tio (x) Quick R a tio (x) 1.5 1.4 1.5 1.5 1.4 1.4 1.3 1.3 1.7 1.6 Leverage Net g ea ring (x) Interes t Covera g e (x) 0.5 2.5 0.3 2.7 0.1 2.8 0.0 3.1 Net ca s h 3.6 Liquidity Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Tuesday, March 13, 2018, the analyst, Tan Kam Meng, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 4 of 4
19. SECTOR UPDATE Tuesday , March 13, 2018 FBMKLCI: 1,861.22 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Plantation Sector Neutral Just No Oomph…. (Maintained) Angeline Chin Tel: +603-2167 9611 angelinechin@ta.com.my www.taonline.com.my Stocks Down but Above Expectation MPOB’s Feb 2018 palm oil stocks fell to a four-month low at 2.48mn tonnes on the back of low production. However, the stock level still came in higher than consensus estimates of 2.37 – 2.39mn tonnes. The deviation was mainly due to higher-than-expected imports, which increased to 67.2k tonnes (+92.9% MoM, +66.5% YoY). Exports came in within expectations with a 13.3 % MoM decline to 1.31mn tonnes, while domestic usage also declined by 41.0% MoM to 170k tonnes. Production Hit a 1-Year Low Production declined to a one-year low at 1.34mn tonnes (-15.4% MoM, +6.7% YoY), shy of market expectations. All states registered a MoM decline led by Sarawak (-72.7k tonnes), followed by Sabah (-56.0k tonnes), Johor (-51.2k tonnes) and Perak (-24.4k tonnes). The low production is mainly attributed to the seasonally low production period and shorter working days, in our view. The Feb FFB yield decreased by 16.3% to 1.23 tonnes/ha. Nevertheless, it was still above the Feb 2017’s level of 1.13 tonnes/ha. We observe that FFB yield in Sarawak has dropped to below the 1 tonne mark to 0.93 tonne/ha (-22.5% MoM, -14.7% YoY). The last drop to below 1 tonn/ha was in March 2016. YTD, Sarawak’s yield has dropped by 7% on YoY basis compared to 23% and 27% growth in P. Malaysia and Sabah, respectively. Exports Remain Sluggish Exports were within expectations. China recorded a sharp plunge in exports to the low of 105k tonnes (-33.1% MoM). However, on a YoY basis, it increased by 1.7%. Exports to India expanded for the third consecutive month to 314k tonnes (+55.7% MoM, >100% YoY). We believe the increase could be due to the restocking activities ahead of the anticipated import duty hike on palm oil in March. Exports to EU also increased by 31.3% MoM (+60.5% YoY) to 246k tonnes. YTD, total exports increased by 18% YoY to 2.8mn tonnes. Most of the major export destination registered a double-digit YoY growth except for China (-3.2% YoY). Looking forward, cargo surveyors, SocieteGenerale de Surveillance (SGS) and AmSpec Agri estimates that the palm oil exports for the first 10 days of March to decrease by 19.3% and 12.1% to 340k and 358k tonnes, respectively. CPO Price: Uncertainties Surrounding YTD, the average CPO spot price stood at RM2,481/tonne (versus RM3,203/tonne in 2017). The price has depreciated by almost 7% in March. We believe the decline could be due to market expectations of the potential rebound in production and the sluggish demand from China and India. Meanwhile, CPO futures (FCPO) for May delivery closed at RM2,381/tonne yesterday. Potential near-term drivers will likely be centered on the i) U.S. biofuels policy, ii) Indonesia’s biodiesel quota, and iii) Chinese retaliation on US soybean exports for metal tariffs, which could trigger higher demand for palm oil. Maintain Neutral We are currently reviewing the underlying CPO price assumption (RM2,800/tonne) to take into account the weakening of La-Nina, the downside to crude oil price and lower exports. We reiterate our Neutral recommendation on the Plantation sector. For stock picks, we like Sime Darby Plantation (TP: RM6.25/share) for its attractive growth profile, a sustainable dividend policy of 50% payout ratio, a strong earnings growth prospect and attractive Page 1 of 4
20. 13-Mar-18 valuations . We also like TSH (TP: RM1.97/share) as the company is a main beneficiary of CPO price upcycle and higher potential growth in production due to its young trees age profile. Other BUY calls include KFIMA, and IOI. Maintain Hold on KLK, Wilmar and Indofood Agri as near-term catalysts have already been priced in. Lastly, maintain Sell on United Malacca, FGV and IJMP due to pricey valuations. Our re-rating catalysts include: 1) Extreme weather change, which would affect both the production and CPO price, 2) Downward revisions in soybean production estimates, and 3) Better-than-expected demand in China and India. Figure 1: Movement in Stockpiles Figure 2: CPO Production (YoY Growth) Source: MPOB, TA Research Source: MPOB, TA Research Figure 3: Monthly Palm Oil Data '000 tonnes Production Stock Export Dom. Usage Import Feb-17 1,259 1,459 1,108 273 40 Jan-18 1,587 2,550 1,514 289 35 Feb-18 1,343 2,478 1,312 170 67 % MoM (15.4) (2.8) (13.3) (41.0) 92.9 % YoY 6.7 69.8 18.5 (37.6) 66.5 2M2017 2,535 2,396 459 112 2M2018 2,929 2,826 459 102 YoY % 15.5 18.0 0.0 (8.9) Feb-18 246 41 105 314 68 539 1,312 % MoM 31.3 (5.9) (33.1) 55.7 (33.2) (34.6) (13.3) % YoY 60.5 12.7 1.7 135.1 37.8 (14.8) 18.5 2M2017 291 72 271 273 97 1,392 2,396 2M2018 433 84 262 515 169 1,363 2,826 YoY % 48.8 16.8 (3.2) 88.8 74.7 (2.1) 18.0 Source: MPOB, TA Research Figure 4: Monthly Palm Oil Exports Data '000 tonnes EU-25 US China India Pakistan Others Total Feb-17 153 36 103 133 49 633 1,108 Jan-18 187 43 157 202 101 824 1,514 Page 2 of 4